A survey of corporate counsel by accountancy firm Grant Thornton suggests that the battle for legal talent will be hotting up over the coming months.

The survey of 100 dispute resolution lawyers included 50 corporate counsel from predominantly FTSE 350 companies. Of the in-house lawyers who responded, 58% said they had plans to increase the size of their in-house department over the next 12 months.

In individual sectors, this desire to bring more work in-house was even greater. For example, in the construction sector, 80% of in-house lawyers were intent on increasing their headcount. In banking and financial services the figure was 70%, while in the insurance sector it was 60%.

Planning to increase your in-house legal department is one thing. But even assuming that the budgets for such expansion are approved, how realistic are these ambitions at a time when law firms are falling over each other to hire and retain staff?

In April, Legal Week's The Verdict survey uncovered some concern among corporate counsel about their ability to attract young lawyers in the light of this year's round of assistant pay hikes.

Sixty-two percent of the respondents predicted recruitment would become tougher thanks to the increases, which have pushed starting salaries for assistant solicitors to well above £50k.

But the battle for talent is not quite as one-sided as it may seem, given the high levels of dissatisfaction among assistant solicitors working at the leading law firms. Just half the respondents to a recent Legal Week survey of 2,500 assistants said partnership was their ultimate goal.

In an article in last week's issue of Legal Week, Linklaters managing partner Tony Angel highlighted the challenge law firms face if they are to satisfy the demands of a new generation of lawyers for whom partnership "is one of several options as they build a portfolio of skills".

He called on law firms to reinvent the apprenticeship model by encouraging partners to become more involved in the training and nurturing of their assistants.

A survey of assistants by Legal Week's research arm, Legal Week Intelligence, backs up Angel's assertions. While assistants at the top firms generally feel that their demands for interesting and challenging work are being met, they feel undervalued and powerless in their efforts to secure a work/life balance.

While general counsel hardly want their lawyers to regard going in-house as a soft option, they would be missing an open goal if they did not highlight the greater potential for in-house lawyers to achieve a modicum of work/life balance.

But if Grant Thornton is to be believed, in-house departments are getting themselves into a position where they can also make more of a virtue of the type of legal work that is on offer.

In the analysis of its survey, it points to a trend for companies to recruit specialist lawyers who are capable of applying their particular brand of legal expertise to their companies' requirements.

Several recruiters back this claim, saying they have noticed more demand for in-house lawyers with the kind of expertise that has traditionally been the preserve of private practice firms.

For example, earlier this year FTSE 100 retail company Sainsbury's recruited an additional employment lawyer in a bid to carry out more of that kind of work in-house.

And since its demutualisation and flotation on the London Stock Exchange, Standard Life has focused on recruiting specialists with a greater level of experience, rather than more recently-qualified generalists.

Standard Life legal manager Colin Anderson says: "We felt we needed to bring in specialists in the areas of commercial contracts and dispute resolution. We are trying to work smarter and more effectively as we have to watch our costs."

Other companies that have been boosting their specialist capability include Microsoft, which has recently recruited an IP/IT lawyer, and Dell, which recently hired a senior employment lawyer for its Brussels office.

And with the City in the midst of a transactional boom, the financial institutions are making regular raids on law firms for specialist talent in certain fields such as structured finance. While in-house departments can rarely match the salaries in private practice, this is one area where they can, and do, call the shots.

O2 general counsel Philip Bramwell says that in-house teams in the telecoms sector tend to be well staffed with specialists. "Telecoms is so heavily subjected to regulatory interference we can justify having a competition law team," he says. "The fact they are doing heavyweight, leading cases means you can attract and retain the best people."

But while in recent years he has noticed a trend among in-house departments to recruit more specialists, Bramwell says that external firms will always be called upon during times of heavy workload. "The strength of the law firms' business model is that no in-house department can ever staff to peak demand," he says. "In-house you have to staff on the basis of a budget that is often based at mean level."

One example Bramwell gives is in the area of intellectual property. "We can sustain a couple of IP lawyers dealing with our brand portfolio, but if we have big infringement [cases] we have to go to external firms," he says. "The cup will fill up and overflow."

The generalist versus specialist debate is hardly a new one. Nor is it likely ever to be resolved decisively one way or the other. But if corporate counsel can develop centres of technical excellence within their legal departments, they will be equipping themselves with one more weapon in the ongoing fight with private practice for legal talent. |

Talkback

Has the era of the generalist 'In-House' ended? Post your comments online at: legalweek.com/talkback